Review of Rangers accounts 2019

[Bill 13,717]

8 hours ago, Bluedell said:

It's not the full £11.3m noted. It's really the £8.7m figure that I refer to.

 

The notional interest doesn't refer to a previous period or is a non-repetitious cost.

 

Accounting rules have changed since you had your company. 

 

Let's say that Rangers owe £9m for players and there are directors' loans of £15m. We both understand that these are the amounts that are to be paid. However new accounting rules state that notional interest has to be charged on these amounts, so accounting entries of £1m interest for the players and £1.5m interest on the loans are charged.

 

This means that in the balance sheet rather than £9m and £15m showing as being owed, it now shows £10m and £16.5m and we've got an interest payable charge of £2.5m in the P&L. This is despite the fact that we're only going to repay £9m for the players and the loans will probably be converted to share capital. We're never going to incur the £2.5m through the P&L.

 

It's crazy, but that's the way that accounts are being prepared at the moment.

 

Apologies if you understood that already but I fail to see why notional interest is an actual loss.

 

I'd agree with your point on the non-repetitious costs and the fact that we've still got a way to go yet to survive without support.

No, you're right, I knew nothing of this change and now understand where you're coming from. I can sort of see why they've done this  but throughout the myriad of changes to accounting standards over the years the aim remains the same ... to reveal the underlying health or otherwise of the enterprise. Would reporting an EBIT or PBIT figure in any way allow these transient interest provisions to be stripped out - is that even acceptable from an audit pov?

Edited November 6, 2019 by Bill

[Bluedell 5,679]

48 minutes ago, Bill said:

No, you're right, I knew nothing of this change and now understand where you're coming from. I can sort of see why they've done this  but throughout the myriad of changes to accounting standards over the years the aim remains the same ... to reveal the underlying health or otherwise of the enterprise. Would reporting an EBIT or PBIT figure in any way allow these transient interest provisions to be stripped out - is that even acceptable from an audit pov?

I'm not convinced that the aim is to reveal the underlying health any more but that's not a discussion for here. 

 

I don't know if your suggestion is allowable (I suspect not or else they may have done it)  but it would make a lot of sense to do it if they could. 

[forlanssister 3,114]

On 05/11/2019 at 13:02, Bluedell said:

Cash

I was initially surprised that the level of cash was only at £1m, but we have £14.7m of debtors which is season ticket cash which is in respect of season tickets that are paid by supporters using deferred payment plans or credit cards so that will be converted into cash.

 

The credit card companies are passing on the cash over the course of a season to limit their risk. This isn’t an issue as it’s only a short term cashflow problem and it hasn’t prevented us from spending £10m on Kent and Helander after the financial year-end.

 

However I may consider paying my season ticket by debit card rather than credit card in the future to allow the club to get the cash quicker.

I'd always assumed that clubs could only "release" a proportion of season ticket monies after each game had been played and this was the reason for the high debtors amounts in football club accounts, is that not actually the case?

 

On 05/11/2019 at 13:02, Bluedell said:

Improvements

There was £4.3m of fixed asset expenditure, presumably work done on Ibrox and HTC. This highlights that the directors are investing significantly in the club’s infrastructure as well as the playing squad.

I've seen claims in various places that this was all one off stuff and wouldn't be repeated so it shouldn't be appearing in subsequent years. I digress as in my humble opinion this is only the beginning of the work that needs to be done and the vast majority of the costs incurred so far have been the minimum necessary repairs with little being actual bona fide improvements. I expect that it may well be less this coming year with monies earmarked for "improvements" being diverted into the footballing side, however I expect it to increase substantially especially if the mooted capacity increase, Edmiston House refurbishment/rebuild etc materialise.

 

Your thoughts on that point?

[forlanssister 3,114]

14 hours ago, buster. said:

Very much so.

 

As I said earlier, it's not rocket science to see that most of what is going on is geared towards the first team stopping 9IAR and potentially 10IAR....and the main risk that I can see is fall-out if we weren't able to achieve it......It's something that isn't being talked about at a fan level for understandable reasons but from a business POV, it's more than just an outside possibility. The bookies would probably tell you that it's probable.

 

 

Beyond that, the headline issues for me are:

 

- Player trading

- Retail

- European group stage reliance / what modification of tournament set-up will mean (new 3rd trophy / Euro Conference)

 

We need to normalise retail, start making substantial profits from player trading whilst having a team that can win the title and make European group stages more regularly than we ever have......A considerable challenge to say the least.

 

I tend to think this is the season we have to win the title and IIRC it would fit exactly with what Paul Murray said back in April 2015, that it could take up to 5 years.

 

 

 

 

 

So Mossad finally released you?      

 

Welcome back!

[compo 7,231]

No matter what way you look at it or tart  it up were still in the red and that's not good .

[ranger_syntax 4,424]

1 hour ago, compo said:

No matter what way you look at it or tart  it up were still in the red and that's not good .

It will be good if we get a return on the investment. 

[buster. 5,264]

12 hours ago, Bluedell said:

I'm not sure I see the relevance of 10IAR financially. We move onto the next season and try and win the league and do as well as we can in Europe if they do. 

 

I'm not bothered about XIAR. It's tainted as it was won off the park by them voting us down to the bottom division and and threatening others to do so. It's not worth anything. I couldn't even tell you what number this season would be if they were to win the League. 

 

We need to continue to rebuild and strengthen and we'll get there. Let's focus on ourselves and not the mob across the city. 

The relevance is that in the negative what if scenario (equally valid to present the positive what if...) it gets to 10 then IMO it'd have potential to be a tipping point of sorts with finance very much the main driver.

 

I agree regards continuing to rebuild and strengthen but when Dave King spoke of structured losses, it was for a limited period whilst we got the club into a position where it could produce/improve players and generate enough income so as to get onto an even keel. That limited period more or less tied in with the three to five year timescale for a title win...... forecast of Paul Murray in the spring of 2015.

 

The structured nature of the losses (mostly debt converting to equity) and the development of our football operation outwith the first team (eg. youths and structure/Ross Wilson appt., etc.) show there is a plan and it's not simply all in or bust.

 

However the plan with regards the finance requirements, can't be structured in that way indefinitely and it's my opinion that we'll need to win the title by next season or we'll see significant downsizing. Or in other words, if they get to 10, they'll probably continue to win it for a while because they'd be so far in front financially. 

 

 

At a football level, IMO we are in with a decent chance of winning it this season and if we were to do so it would release a pressure regards XIAR (it's there regardless of individual opinions) and help us to open up the pathway for the likes of Stephen Kelly and other youths that we need to start adding value. 

 

I'd add that if we could win the League Cup in December, it'd be a hugely positive step towards a positive what if.

 

 

 

 

 

Edited November 7, 2019 by buster.

[Bill 13,717]

10 hours ago, Bluedell said:

I'm not convinced that the aim is to reveal the underlying health any more but that's not a discussion for here. 

 

I don't know if your suggestion is allowable (I suspect not or else they may have done it)  but it would make a lot of sense to do it if they could. 

I should have said the aim of corporate management. The aims of the Treasury and HMRC are clearly another matter, although not always unreasonably so.

[Bill 13,717]

When assessing the financial health of Rangers and progress towards a sustainable future, it might be prudent to assume there are parts of the board's business plan that are not expressed in the current financial statements. It's been my opinion for a while that permanent salvation from recent upheavals can only ever be fully achieved if there is substantial new investment that goes beyond the current support of Dave King and his allies. What they've done in recent years is hugely important but is it only building a platform for a different future?

 

If we're honest, Rangers' mission is to compete with Celtic and unless their financial position is to deteriorate significantly then ours has to improve a very long way from where we are today. We may be able to "trade" our way to success and security but it will take more years to achieve it than most fans are prepared to contemplate. If short term success is to be achieved it can only be done by incurring a level of expenditure that current shareholders will find impossible to sustain for much longer. This is either going to be a much longer road back to the top than anyone is admitting or we are going to need significant new investment, almost certainly corporate investment ... and that is going to bring the return of a familiar risk for the club, which many fans will find equally unappealing.

 

Finding that new investor has to be one of Dave King's priorities. I just hope he finds one we can live with. If not then we might need to re-assess our own priorities a little.

 

 

[Bluedell 5,679]

8 hours ago, forlanssister said:

I'd always assumed that clubs could only "release" a proportion of season ticket monies after each game had been played and this was the reason for the high debtors amounts in football club accounts, is that not actually the case?

From an income viewpoint, yes, clubs would release a proportion of season ticket income per game, so that the half year accounts would show approx. half the money as income as part as a 'creditor', even though we had banked all the cash.

 

However here we have the credit card companies doing the same so we are only receiving the income proportionately unlike pre-admin where we would have received it up front.

 

 

8 hours ago, forlanssister said:

I've seen claims in various places that this was all one off stuff and wouldn't be repeated so it shouldn't be appearing in subsequent years. I digress as in my humble opinion this is only the beginning of the work that needs to be done and the vast majority of the costs incurred so far have been the minimum necessary repairs with little being actual bona fide improvements. I expect that it may well be less this coming year with monies earmarked for "improvements" being diverted into the footballing side, however I expect it to increase substantially especially if the mooted capacity increase, Edmiston House refurbishment/rebuild etc materialise.

 

Your thoughts on that point?

Certainly sounds possible. There's a further £2m stadium improvements and grounds equipment that has been agreed to be spent after these accounts.

 

The thing about this type of expenditure is that it certainly hits the cashflow immediately but will be depreciated over a period of time so doesn't impact the profit and loss account.